Mid-America Apartment Communities, Inc. (MAA) Q2 2026 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the MAA Second Quarter 2026 Earnings Conference Call. During the presentation, all participants will be in listen-only mode. Afterward, the company will conduct a question-and-answer session. As a reminder, this conference call is being recorded today, July 30, 2026. And in consideration of time, we have a one-question limit. I will now turn the call over to Andrew Schaeffer, Senior Vice President, Treasurer and Director of Capital Markets at MAA, for opening comments.

Thank you, Regina, and good morning, everyone. This is Andrew Schaeffer, Treasurer and Director of Capital Markets for MAA. Members of the management team participating on the call this morning are Brad Hill, Timothy Argo, Clay Holder, and Robert DelPriore. Before we begin with prepared comments this morning, I want to point out that as part of the discussion, company management will be making forward-looking statements. Actual results may differ materially from our projections. We encourage you to refer to the forward-looking statements section in yesterday’s earnings release and our 1934 Act filings with the SEC, which describe risk factors that may impact future results. During this call, we will also discuss certain non-GAAP financial measures. A presentation of the most directly comparable GAAP financial measures, as well as reconciliations of the differences between non-GAAP and comparable GAAP measures, can be found in our earnings release and supplemental financial data. Our earnings release and supplement are currently available on the For Investors page of our website at www.maac.com. A copy of our prepared comments and an audio recording of this call will be available on our website later today. After some brief prepared comments, the management team will be available to answer questions. When we get to Q&A, please be respectful of everyone’s time. In an attempt to complete our call within one hour, due to other earnings calls today, we will limit questions to one per analyst. We ask that you rejoin the queue if you have any follow-up questions or additional items to discuss. I will now turn the call over to Brad.

Well, thank you, and good morning, everyone. Core FFO results were ahead of our expectations, with the sequential improvement in new-resident and blended lease-over-lease rates exceeding the prior-year sequential improvement. While recovery in new-resident lease rates is showing improvement, the pace is slower than we would like, given cautious consumer sentiment as we continue to work through the unprecedentedly high levels of new supply deliveries over the past couple of years in a few of our high-concentration markets. We are seeing solid demand, including job growth, household formation, and population and wage growth. And the increase in inbound migration to our properties in the second quarter was the strongest quarterly increase we have seen since we began tracking the metric, reflecting the broad appeal of our high-demand markets. As a result, units absorbed in the first half of the year significantly outpaced new units delivered. As demand remains resilient and new deliveries continue to decline, we expect the recovery to expand and accelerate. Additionally, we are benefiting from our scale and operating discipline. We continue to focus on expense control, and with second quarter year-over-year same-store operating expense growth of just 80 basis points, the teams are excelling in this area. At the same time, the persistent single-family affordability and availability challenges are supporting resident demand for affordable and high-quality rental housing, two areas where MAA excels. Our customer service focus continues to differentiate the MAA experience, driving increased resident loyalty and contributing to our record-low turnover and strong renewal rate growth, improving 50 basis points year over year. We continue to invest in strategic areas of the business to drive future earnings growth, including various new technology initiatives to support our centralization and specialization efforts that will further strengthen our customer service and drive future margin expansion. As Tim will talk about, we are expanding our interior renovation and repositioning programs, which are supported by the new deliveries in our markets stabilizing, where, on average, the effective monthly rent per unit for a new community is over 30% higher than our existing rents, giving us substantial room to expand these highly accretive initiatives. Our property-wide Wi-Fi initiative is in high demand from our residents and is performing well. On the external growth front, the improving demand-supply dynamics, combined with the decreased availability of capital for new projects, make disciplined investing in new developments an attractive capital allocation option. In addition to the Kansas City project where we started construction in the second quarter, we started construction on a project in Nashville, Tennessee, in July. And next month, we expect to start construction on a project on the land we purchased in Northern Virginia. With one more start later in the year, we are on track to get our four development starts for the year. The acquisition market remains slow, with cap rates in the mid- to upper-4% range for high-quality communities that fit our profile. But should more compelling opportunities materialize, we have the balance sheet capacity to support growth in this area. Together, these initiatives reflect a disciplined approach to deploying capital across multiple growth opportunities while maintaining flexibility as market conditions evolve. This same discipline is also evident in our ongoing portfolio recycling efforts, which remain focused on enhancing portfolio quality and supporting long-term earnings growth. In the second quarter, we sold a high-CapEx, 30-year-old property in Raleigh and have two additional properties that should close in the back half of the year: a 42-year-old property in Dallas and our one property in the District of Columbia. These transactions will wrap up our planned dispositions for 2026. With a track record of successfully navigating economic cycles for over 30 years, we remain confident in our ability to emerge from this recovery period with a stronger, more efficient, and higher-growth operating platform. We believe our focus on high-demand and high-growth markets will continue to lead to higher earnings and lower volatility over the full cycle, while our investments in accretive growth initiatives are well-positioned to deliver increasing value and earnings contributions as the demand-supply balance improves. We are encouraged by the building blocks in place: resilient demand, strong absorption, potentially growing migration trends, and a financially strong resident base, all against the backdrop of decreasing supply pressure. As we wrap up July and head into August and September, we see the opportunity for growing momentum and remain confident in our ability to deliver compounding revenue and earnings performance as the recovery continues to accelerate. To all associates across our properties and in our corporate offices, thank you for your continued dedication and focus during this pivotal leasing season. With that, I will turn it over to Tim.

Thanks, Brad. Good morning, everyone. For the second quarter, same-store NOI beat our expectations, with continued lower-than-projected property operating expenses more than offsetting slightly lower average daily occupancy. From a pricing standpoint, new lease-over-lease growth improved 170 basis points sequentially from the first quarter, 20 basis points ahead of the acceleration achieved from the first quarter to the second quarter of 2025. As Brad mentioned, new lease rates have been slower to recover due to lower consumer sentiment and still-elevated but moderating new supply in some markets. But we are encouraged by forward-looking trends. Renewal retention rates and lease rates remain strong. Turnover once again moved lower to 39.6%, and renewal lease-over-lease rates were 5.2% for the quarter. As a result, blended lease-over-lease rates were up 100 basis points from the first quarter and up 20 basis points from the blended rates of the second quarter of 2025. Our resident health remains strong, as reflected in an improvement in our rent-to-income ratio to 18% and continued strong performance in collections, with net delinquency representing just 0.3% of billed rents, consistent with what we achieved in the last several quarters. Broadly, our stronger-performing markets remain relatively consistent with the last few quarters, and we are starting to see some pockets of momentum in other markets. We continue to see strong performance in Virginia and South Carolina, with Norfolk, Richmond, Charleston, Greenville, and the D.C. area markets continuing to outperform the broader portfolio from a pricing standpoint. As with last quarter, our two largest concentration markets, Atlanta and Dallas, outperformed the portfolio in the second quarter in terms of blended lease-over-lease pricing. Austin, though still an underperforming market, showed good momentum and achieved blended lease-over-lease pricing that was 300 basis points better and occupancy that was 40 basis points better than the second quarter of 2025. Orlando is another improving market, with blended pricing up 130 basis points from the same quarter of 2025. Phoenix, Charlotte, Raleigh, and Savannah are high-concentration markets for us that are still facing challenges in the wake of heavy supply pressure despite continued strong demand. During the quarter, MAA Cathedral Arts in Dallas stabilized, and MAA Plaza Midwood in Charlotte completed construction and moved into our lease-up portfolio. MAA Val Vista will officially stabilize in the third quarter and achieved over 90% occupancy during the second quarter. We moved up the stabilization date of MAA Breakwater in Tampa by two quarters due to strong leasing velocity at rents well ahead of our pro forma expectations. We have an additional two properties under construction that are actively leasing. Given the supply pressure in Charlotte, our two lease-ups in this market remain the most challenged in the near term, with concessions running up to eight to 10 weeks on certain floor plans. But with the overall lease-up portfolio, we expect to achieve our underwritten yields as markets continue to improve, retaining the expected long-term value creation opportunity. And the contributions from this group will continue to build through the rest of this year and into 2027. As Brad mentioned, we continue to accelerate and exceed expected returns on our various targeted redevelopment and repositioning initiatives. During the second quarter of 2026, we completed 2,012 interior unit upgrades, bringing our year-to-date total to 3,500 units, 30% higher than the number of units renovated in the first half of 2025. With year-to-date rent increases of $110 above non-upgraded units and average per-unit spending of $5,130, the average cash-on-cash return is approximately 25%, versus expected returns of 19%. These units continue to lease faster than non-renovated units when adjusted for the additional turn time, averaging about 10 days quicker. We would expect to further accelerate this program in 2027. For our common-area and amenity repositioning program, we have six properties that are wrapping up the repricing phase, five properties that are just starting the repricing phase, and six additional properties that are in the early construction phase and will begin the repricing phase in the spring of 2027. The first group is 98% repriced, with average cash-on-cash returns of 13%. We expect similar returns from the remaining active projects, and we will look to expand our scope in this initiative in 2027. Our community-wide Wi-Fi initiative, which began in 2024, continues to expand. We have 28 live properties where the service is rolling out to residents as leases are signed. And we are further expanding the initiative this year to an additional 38 properties. Resident adoption at the first 28 properties is accelerating, with revenues quickly increasing from $500,000 in the first quarter to $850,000 in the second quarter, and will continue to grow from here. Looking forward to the third quarter, we are encouraged by the early momentum we see in pricing and occupancy and early signs of a potentially later seasonal peak. Our strategic decision to push new lease pricing where possible in the late second quarter and into July has allowed us to maintain momentum in renewal pricing and new lease pricing. Combined with declining supply pressure, strong demand, and the broad market-level absorption that occurred in the first and second quarters, our current position sets us up to capture momentum in new lease pricing later in the season and achieve renewal rates consistent with the second quarter, well above what we achieved in the third quarter of last year. With an assumed backdrop of steady demand, fewer units in lease-up, and current pricing trends continuing, we expect third quarter blended pricing to be better than the second quarter, a trend not seen in the last four years, since third quarter blended pricing typically trails the second. That is all I have in the way of prepared comments. Now I will turn the call over to Clay.

Thank you, Timothy. Good morning, everyone. We reported core FFO for the quarter of $2.08 per diluted share, which was $0.02 ahead of our second quarter guidance. The outperformance was driven primarily by continued strength in expense management, with same-store expenses coming in $0.015 favorable to our expectations and NOI from our non-same-store portfolio contributing an additional $0.01, partially offset by same-store revenues that were slightly below our expectations. As Brad and Timothy highlighted, our teams continue to demonstrate an ability to control costs, maintain strong resident retention, and maintain high resident satisfaction. That consistent execution remains a key strength of our operating platform and contributed meaningfully to our second quarter outperformance. Repair and maintenance and personnel costs were the primary drivers of our expense favorability during the quarter. We funded approximately $81 million in development and predevelopment costs during the quarter. At June 30, our development pipeline totaled $598 million, leaving $237 million of remaining funding commitments over the next three years. Combined with the two projects that Brad referenced starting in the third quarter, our development pipeline will total approximately $804 million. Looking ahead, we expect to add additional projects to the pipeline during the balance of the year and into early 2027, supporting our objective of building and sustaining a development pipeline of approximately $1 billion and reinforcing development as an important driver of long-term earnings growth. Our balance sheet is solid and is set to support our development pipeline, any acquisitions that may emerge, along with the other growth initiatives Timothy discussed. At the end of the quarter, we had over $880 million in combined cash and borrowing capacity under our revolving credit facility, and our net debt-to-EBITDA ratio was 4.5 times. At June 30, our outstanding debt had an average maturity of six years at an effective rate of 3.9%. During the quarter, we continued our measured approach to share repurchases and repurchased 383,000 shares of our common stock at a weighted average share price of $130.66 for a total of $50 million. In June, we entered into an unsecured delayed-draw term loan with a committed principal amount of $350 million, with $100 million outstanding under the loan at quarter-end. Turning to our outlook for the year, we have maintained our core FFO guidance and have updated our same-store revenue and expense guidance to reflect our current view of leasing conditions for the balance of the year. While underlying demand remains healthy, the pace of recovery in new lease pricing has been somewhat slower than assumed in our prior guidance. We continue to prioritize long-term revenue performance through disciplined pricing decisions, which we believe support renewal performance and position us well to capture the coming new lease pricing momentum. As a result, we have slightly reduced our expectations for both effective rent growth and average occupancy for the year. As we updated our revenue assumptions for the balance of the year, we also recognized favorable trends developing in other areas of the business. Expense performance has remained strong, driven by continued discipline across our operating platform, lower projected real estate taxes, and favorable anticipated insurance costs given our recent coverage renewal. In addition, our non-same-store portfolio continues to perform well, with lease-up communities performing in line with, and in some cases slightly ahead of, our expectations and contributing incremental earnings support. In 2026, we project over $25 million in incremental year-over-year NOI from the properties represented in this portfolio. Collectively, these favorable trends offset the revisions to our revenue outlook and support our maintained full-year core FFO midpoint of $8.53 per diluted share. That is all that we have in the way of prepared comments. Regina, we will now turn the call back to you for questions.

We will now open the call for questions. If you would like to ask a question, please press *, then 1, on your touch-tone phone. If you would like to withdraw your question, press *1 again. Our first question will come from the line of James Feldman with Wells Fargo. Please go ahead.

Great. Thanks for taking the question. I mean, just comparing some of your comments on July and thoughts on the third quarter, what you delivered in the second quarter, and then the revenue cut, can you give us some comfort or maybe talk us through how you decided to cut now, how much you decided to cut the revenue guide now, and what gives you comfort that this will not be the same situation in the third quarter or fourth quarter?

In terms of needing to pull back? Yeah, this is Tim. I mean, I will talk a little bit about what we are seeing in July and Q3, and I think that is really what, you know, is driving our optimism as we are starting to see some momentum as we look out into Q3. July itself, we expect, will be pretty similar in terms of pricing to what we saw in Q2, with occupancy building as we have moved through July and ending in a good spot with July occupancy. But where we see the optimism and where we think we have made the right decisions is what we are seeing for August and September. First, if we look at renewals for the entire Q3, we have retention rates well above what we saw this time last year, well above what we saw in Q2, and we are continuing to see renewal rates in that 5%-plus range. I mean, we have visibility into pretty much all of Q3 at this point. Probably 98% of our renewals are locked in at this point. And then when we look at where we stand with new lease pricing and what we have done on the pre-lease side, obviously, there is still more to come in the rest of the quarter. We probably still have about, you know, 40% of our new leases or so that will still come over the next two months. But when we look at the pre-leasing for August, we are running 70 to 80 basis points better than we were this time last year. And when we look at September, we are running even higher than that. So we think, with this continued demand, what we are seeing—lead volume is up, you know, 7% to 15% compared to this time last year, and visit volume is up close to 10%—all these factors lead to what essentially could be a little bit of an extended prime leasing season. And James, I will just touch on the guidance change.

I mean, the one thing, to Timothy’s point, is we are still seeing very strong acceleration as we work into the back half of the year. But what I would say is, just not quite at the same pace as what we had initially expected coming into the year. So we are still seeing the trajectory move in the direction we expected, just not quite at the same pace that we had expected.

And James, not to be left out here, I am going to add a couple of comments to this one as well. This is Brad. I think it really starts with what we are seeing on the demand side in terms of our view for the back half of the year. Across the board, we are seeing really good demand across our markets. And in the markets where we do have heavier supply—you think of Phoenix, Charlotte, Raleigh, Savannah, and Nashville—those markets are a little bit more difficult for us right now. We have a bigger hole that we have to dig out of for those, but we are showing progress. I mean, if you look at our entire portfolio for the second quarter, almost 80% of our markets posted positive blends in the second quarter. So you can see the recovery is pretty broad-based. You know, two-thirds of our markets are showing blends above our portfolio average. So, you know, if you look at what is below average for us, a third of our portfolio, those are predominantly some of these higher-supply markets. So again, we have a bigger hole that we have to dig out of for those, but we are doing it. On the demand piece, look at the absorption in the first half of the year that Timothy talked about. Second quarter absorption across our markets was 1.8 times new deliveries. So we are seeing really strong demand. And, you know, as we continue through the balance of this year, we certainly believe that more of those poorer-performing markets will start to show some of that stronger pricing power, particularly as we look at the blended rates in the third and fourth quarters.

Our next question will come from the line of Eric Wolfe with Citi. Please go ahead.

Maybe just to follow up on James’s question, can you just discuss your guidance in the second half from a blended rent growth perspective, so what you are forecasting in the second half specifically? And just to make sure I understood sort of the components of what you are seeing right now, you expect your August and September blends to increase from July because renewals are higher and your retention is higher. I just want to make sure I heard that correctly.

Yeah. This is Timothy. And to confirm your second point, yeah, I mean, we would expect August and September pricing to get a little bit better from what we had in July for all the reasons we just talked about and the trends we are seeing so far. But if you think about our full-year blended pricing and kind of the back half and how we hit our guidance, you know, we are at positive 0.3% blended year to date through June. And our full-year forecast is somewhere in the 50-basis-point range blended for the full year. So with a little more of our leases skewed to the back half of the year, somewhere around 0.6% blended is what we are tracking for the back half of the year. And so, to maybe put that into a little bit of perspective, what that would look like from a blended standpoint is our Q3 blended performance being a little bit better than what our Q2 performance was, and then our Q4 performance looking a little bit better than what our Q1 performance was. So that is kind of a way to think about it. And it is, you know, the expectation that August and September show the strength that we are seeing right now, and then you see a little bit less moderation in Q4 based on, again, the demand, the moderating supply, and everything we are seeing, and not experience the same level of drop-off that we saw in Q4 of last year.

Our next question will come from the line of Nick Yulico with Scotiabank. Please go ahead.

Thanks. Good morning. I just wanted to, I guess, go back to, you know, some of the commentary that you guys gave on pricing for assets. I think, Brad, you were saying cap rates below 5% are still being seen in your markets. And I guess my question is, if that is the case and we are still dealing with, you know, a sort of slow recovery in certain markets, why not buy back more stock and sell assets rather than put more money into the development pipeline right now?

Well, thanks, Nick. Yeah. I mean, I think, first of all, what you have to consider is that the 4.5% to, you know, call it upper-4% cap rate range, is for the types of assets that we want to buy. So those are brand-new assets in some of our higher-growth markets. You know, on average, what we have purchased the last few years has been one year old. It is a lot of times in lease-up. So that is a little bit different type of product than what we generally are looking to sell. The asset that we sold this year—the property that we sold, as I mentioned in my opening comments, in the second quarter—was an older asset and had a lot of CapEx needs. You know, the market cap rates that we are getting for those are probably in the mid- to upper-6% range on average. I would say we have got four properties that we are selling this year. You know, those will be in the high-5% to low-6% range in terms of cap rates. So there is a little different math on what we are selling. But in terms of share buybacks, you know, we have talked about this a lot. You know, our overall focus is on driving long-term TSR performance without introducing a lot of earnings volatility. And so it is very balanced. You have seen that in terms of what we have repurchased. You know, we continue to believe in the merit of putting capital into development, into the properties that we are developing. The average yield expectation of those, with conservative underwriting, is still in the 6% to 6.5% range. The NOI growth we have been able to generate from those, on average, exceeds what our overall portfolio delivers by 50 to 100 basis points. And then especially given the fact that, you know, supply continues to be lower than long-term averages this year and is projected to be that way for the next three years at least, we will be delivering into a pretty strong operating fundamental market. So we continue to believe that is the way that we want to allocate capital for long-term TSR performance at the moment.

Our next question will come from the line of Jana Galan with Bank of America. Please go ahead.

Thank you. Good morning. I was hoping you could talk a little bit about the better-than-expected performance from the lease-up properties. Has there been any shift in strategy on pricing, concession usage, or job growth in those markets? And then maybe if you could just talk to, you know, concession activity overall in your markets.

Yeah. This is Timothy. I will touch on that. So on the lease-up portfolio, I mean, not really any change in strategy. I mean, we are starting to see some momentum. We are starting to see some good demand. If you look at some of the properties in our lease-up portfolio, MAA Nixie gained over 20% occupancy over the last quarter, Liberty Row over 30%, and Plaza Midwood over 20%. So I think, as we are seeing with the broader portfolio, the number of units in lease-up and the pressure from supply are starting to moderate. We are starting to see that with the lease-up portfolio. The two Charlotte assets, as I mentioned, are the ones that are still a little bit behind in terms of where Charlotte is in the supply pipeline. Those are the ones that we are watching, but we have seen really good momentum with the lease-up portfolio, as you mentioned. And then on the broader concession market, not a lot of change from what we talked about last quarter. If you think about our overall portfolio, broadly, four to five weeks is pretty consistent across most of our markets. We are seeing some improving concession activity. Orlando and Charleston are two markets I would point to where we are seeing concessions down. And then, you know, Charlotte and Austin are still where—not necessarily up from where they have been—but probably the broadest usage of what we are seeing is still in Charlotte and Austin. But overall, it is a pretty consistent picture from what we have seen in the last few months.

Our next question will come from the line of Brad Heffern with RBC. Please go ahead.

You mentioned in the prepared comments that second quarter in-migration was, I think you said, the strongest ever since you started tracking it. Can you—are there any numbers that you can put around that or additional color?

Yeah. I mean, the numbers that we could put around that, you know, we saw in-migration go from, call it, 10% in the first quarter to about 13% in the second quarter. And that, you know, it is not really one market that we can point to that is really driving that. It was generally an overall increase. So, you know, we have seen absolute levels of in-migration that have been higher than that, but we have never seen a quarterly increase that has matched that in the past. So, you know, certainly one quarter does not make a long-term trend, but I certainly think, in terms of incremental demand components for the business, that is something that we are continuing to watch as we go forward.

Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead.

Thanks. Good morning, everyone. Timothy, I just wanted to clarify: Is the expectation for blended rate growth in the third quarter specifically from the lower turnover and stable renewal rate growth? Or are you also seeing new lease rate growth improve? Because I know you had talked about, you know, the easier comps earlier in the year being a benefit. And then can you also share what new lease rate growth and occupancy were for July? Thanks.

Yeah, Austin. Thanks for the first part of your question. I mean, it is a little bit of both. Obviously, the renewals are a huge part, and we are seeing, as I mentioned, the retention rates be higher in Q3 than they were both in Q2 of this year and Q3 of last year. So obviously, more of those are blending in. And we are, you know, running 5%-plus, whereas in Q3 of last year, we were in the 4.5% range. So that obviously plays a big part. We are seeing, as mentioned, the momentum on the new lease side as well. You know, with everything we have seen on demand and what we have seen with pre-leasing, August and September new lease pricing looks better than it did at the same time last year. And to your point about the comps as well, I mean, we really saw pricing drop off pretty significantly around this time last year. So in August, new lease pricing dropped about 70 basis points, and then August and September dropped 140 basis points, and we do not expect that to recur this year for all the things we mentioned. But, you know, for July, I expect we will end July around 95.4% in terms of occupancy, and I think the new lease and blended pricing probably looks pretty similar to what we reported for Q2.

Our next question will come from the line of Adam Kramer with Morgan Stanley. Please go ahead.

Thanks for the time. Just wanted to ask on the capital allocation side. It sounds like dispositions may be wrapped up for the year. It seems like, for acquisitions of the type of assets you guys want to buy, probably should not expect much here for the next little while, at least. So just wondering, should we expect more share repurchases? And maybe just an update on the debt side. I know there are some moving pieces there. I guess, just more generally, sort of what are the capital allocation priorities here for the next little while?

Hey, Adam. This is Brad. I can certainly take that. As I mentioned a moment ago, I mean, our approach is to have a pretty balanced approach about taking advantage of near-term opportunities as well as taking advantage of long-term opportunities. To your point, yeah, I mean, our disposition plans for the year are close to being wrapped up. We have sold two properties. We have got two more that should sell by the end of the year. By the way, one of those properties is in a JV, the one that is in the D.C. market. But the proceeds we will get from those will be pretty similar to what we have used so far to repurchase shares. So it is very balanced in terms of how we are looking to allocate capital there. But our priority continues to be, you know, development. That is number one. And as Timothy talked about, you know, continuing to invest in our Wi-Fi initiative, which is a highly accretive use of capital for us. We are growing our redevelopment and repositioning programs to drive earnings performance over the next year or so. That initiative continues to perform better as the new supply coming into the market stabilizes, with rents that are over $500 a unit higher than our rents on average. That program continues to perform quite well. So you will see us continue to lean into that as well. Our property repositioning continues to be an area of focus for us. So that is kind of the prioritization that we have in terms of capital allocation. Clay, I do not know if there is anything you want to add on the debt piece you mentioned.

Yeah. This is Clay. I mean, all in here, as we have talked about in the past, we do have a maturity that is coming due in September of this year for $300 million. So we have got plenty of capacity with this term loan in place. Some of these other dispositions that Brad alluded to will help cover that maturity. So that is our plan for the financing needs. There is a good chance that we come back into the market at some point late this year, potentially early next year, as we are pushing our development pipeline. But that is what we see right now over the next few months.

Our next question will come from the line of Haendel St. Juste with Mizuho Securities. Please go ahead.

Hey, guys. Morning. Thanks for taking my question. I wanted to go back to the markets that were underperforming. You outlined Charlotte, Raleigh, and Nashville, where supply still seems to be a factor. Contrast that with some of the Sunbelt markets where you are seeing some improvement. You mentioned Austin a few times. I think you mentioned Orlando. I guess I am curious if that is down to submarket locations. Is it something else? And also, maybe some color on the top two-thirds of the portfolio, where blends are better than the bottom third. So maybe some color on the top two-thirds’ blends versus the bottom. Thank you.

Yeah. And Haendel, this is Timothy, and I will touch on the first part of that. I mean, you know, for the markets that are performing pretty well, it is generally pretty broad-based. You know, we have talked a lot about the stronger markets here for several quarters. So I would say those continue to be broad-based in most of the submarkets. I think where we are starting to see some momentum and some green shoots is in some of these improving markets where it is popping up in submarkets. So Austin is a perfect example of that, where, you know, some of the near-south submarkets have seen some momentum over the last couple of quarters. And then I would say even into the second quarter, some of the Round Rock and even some of the northern assets started to show some momentum. We have had some of those properties that were in the mid- to high-teens negative new lease pricing just a couple of quarters ago that are now in the mid-negative-single digits. So 1,000-basis-point types of improvement in new lease pricing. And that is where the opportunity lies in a lot of these highly supplied submarkets. As those concessions burn off, that is where you start to see some pretty quick momentum. But still, broadly, in our larger markets, more of the urban submarkets do well, particularly in Dallas and Atlanta. In Tampa, that has been a little bit weaker. We are seeing some good performance there. And then in the weaker markets, it is more broad-based. So Charlotte and Raleigh, some of those, you know, were a little further along, or a little bit later, in the supply pipeline and got an extreme amount of supply. So those are ones where, you know, if you have a market that is overall underperforming, it is because we are seeing it more broadly across a lot of submarkets. I think those will become more of a story as we head into next year.

And Haendel, this is Brad. I will just add one comment there on your question about the top two-thirds versus the bottom. I mean, I think, in general, what you see playing out there is an indication of our overall diversification strategy, where we are allocating capital between large markets as well as mid-tier markets. And generally, what you will see on the top portion of that graph, so to speak, are a lot of our mid-tier markets. A higher proportion of those certainly are above the portfolio average. And generally, that is what you would expect right now, as they face less supply pressure than some of these other markets, some of the larger markets that you mentioned and we have mentioned. And so the demand-supply balance weighs more toward demand. We are seeing strong demand in those markets, so we see, obviously, stronger performance out of those right now. And that is what we would expect to occur as demand continues and absorption continues in some of these more-supplied markets, like Charlotte, Phoenix, and Raleigh, as that new supply continues to get absorbed. But that is what I would say characterizes that breakdown to some degree.

Our next question will come from the line of Alexander Goldfarb with Piper Sandler. Please go ahead.

Hey, morning down there. Just sort of a question on markets overall. Clearly, the Sunbelt has a long history of strong growth over time. The amount of oversupply is clearly a lot to deal with for anyone. But the lack of supply nationally—how is that affecting your thoughts on other markets? I mean, we have seen the Midwest become more popular with some of the coastal guys. And just as you guys look to, you know, allocate capital, are there other markets where maybe in previous cycles you would have said no, but now you are increasingly interested? Or is it, you know, sort of the basic reality that there is just a lack of supply of product on the market, and therefore, even in markets that you would like to enter, it is just hard to see a path to establishing a presence that is economic?

Well, thanks, Alexander. This is Brad. I mean, we have talked about it in the past. We do continue to look at new markets and evaluate markets. And I think, you know, certainly, the key component of that is we want to maintain what our overall strategy is, and that is allocating capital to markets that have high demand. And if you look across our portfolio, our markets generally have that, particularly when you are comparing them to other markets. I do not think we want to go into a market just because it is a low-supply market. That is only a benefit to the extent that you have demand. And so we do think, over time, the demand fundamental is what has the highest impact and has a higher correlation to overall long-term performance. So we will continue to focus on the highest-demand markets that we have. There are markets that we are looking at that have similar dynamics. Columbus, Ohio, we have talked about before, is a market that we have considered, given some of the dynamics there. We want, certainly, a business-friendly environment, and low taxes continue to be part of that. But I think it is also important to remember, if you look at the demand drivers really across our markets, you know, I think it was in the second quarter, 18 markets across the country showed greater than 1% job growth. Eleven of those markets were in our footprint. You know, only five markets showed greater than 2% job growth, and four of those were in our markets. If you look at population growth, whether you are looking at one year, five years, or 10 years, 14 of the top 15 markets are MAA markets. So I think we continue to be in the right markets and continue to allocate capital to the right markets for long-term performance. It is the comment we were making about our markets and the number of markets that are performing above average and are showing positive blended lease rates being so broad—the recovery is coming. And so as the new supply continues to get absorbed in some of these other markets, this high demand that we continue to see will pay off. And we will continue to see the long-term performance dynamics, I think, that we have seen historically that you mentioned at the beginning of your question.

Our next question comes from the line of Ami Probandt with UBS. Please go ahead.

Hi. Thanks. The Census Bureau data has shown an uptick in permits across a handful of Sunbelt markets. So recognizing that some of these might not be directly competitive with your portfolio, I am still wondering: Is this a sign that developers are starting to get more comfortable with the trajectory of rent growth moving forward and getting back in and ramping up starts again?

Well, I definitely think developers want to develop. And, you know, from the developers that we talk to as part of our pre-purchase platform, where we have relationships with the top developers in the country, I would say broadly, we are not seeing an uptick in starts coming. In fact, we continue to find opportunities to partner with those developers on additional projects because their equity partners have backed out of projects. I think the ability to find capital, equity capital in particular, for new developments continues to be challenged. And we are not seeing that really change at the moment. I think, to your point, you know, permits kind of ebb and flow a bit, and the relationship between permits and construction starts can ebb and flow. But we are not seeing, from the folks we are talking to and the data we are looking at, an uptick. If you go back and look, new starts for the last 13 quarters have trended below long-term averages. So we see that trend continuing as we look out over the foreseeable future. We do not see a material pickup from this point right now.

Our next question will come from the line of Anthony Paolone with JPMorgan. Please go ahead.

Good morning, guys. I am on for Tony. Thanks for taking my question. Going back a little bit, I think, Brad, in your prepared remarks, you mentioned the cautious consumer. Was there anything, I guess, you guys were seeing specifically from a consumer perspective that caused the slowdown in new lease pricing? I guess, were you seeing tenants shop around a bit more? Just curious about any color you could give as to what is driving that shift.

Yeah. I mean, this is Brad. I can start. Timothy could give any other details. But yeah. I mean, I think, you know, what we have seen is a very healthy resident, a very healthy prospect. Our rent-to-income ratios continue to decline and are the best that we have seen in a long, long time at 18%. Our collections continue to be really, really strong. But I think in markets where there are a lot of options and a lot of supply, we do see folks shopping around a bit more, looking at all their options in the market, and, you know, taking a little bit longer to make decisions. So we have seen that. I think the good news is, even to the point that Timothy was mentioning earlier about the momentum we have in August and September, I think in part that does indicate a little bit more optimism from the prospects’ perspective as they look out over the next couple of months. There is a level of, I think, optimism that we are seeing as we sign those pre-leases out for the next couple of months. Timothy, anything you would add to that?

Yeah. I think, just to your point about the impact on new lease pricing, I mean, I think for Q2, we did see, you know, people just taking longer and shopping, as Brad mentioned. Our pre-leasing was down a little bit in Q2 relative to last year, and that is more of an indication of people that are, you know, making decisions and showing confidence in where they are. I think with people shopping around longer, they are making their decisions later, doing more immediate-type move-ins, and that is kind of the most volatile part of the new lease pricing curve. And so I think that plays into it. But to Brad’s point, we are seeing that change a little bit in Q3. We are seeing a little more pre-leasing and a little more momentum, which gives us confidence for the rest of the year.

Our next question will come from the line of Steve Sakwa with Evercore ISI. Please go ahead.

Yeah. Thanks. I just wanted to touch on expenses, which have obviously been a bright spot for the company this year. Are there things that we should be thinking about as we think about 2027 expense growth? Any kind of one-time items or things that may not repeat that, you know, helped this year but may not be there next year?

Yeah, Steve. This is Clay. I will touch on that for a second. I mean, I think what you are seeing here this year is just our continued focus, as you alluded to, our continued focus on controlling expenses. And we have shown a long history of that, and it continues to show even in the current environment. As we look forward to next year, you know, I do not see anything on the horizon at this point that would make me think that there are some one-time savings or any one-time, you know, large items coming our direction. I would expect next year to look somewhat similar. You know, it could be a little bit higher growth rate just given where we are today. But I would expect, generally, it would look, you know, not too far different from what we are seeing at the moment.

Our next question will come from the line of Michael Gorman with BTIG. Please go ahead.

Maybe going back to Alex’s question on markets for a second and taking the flip side of it. As you have gone through this cycle, looking at any of your market exposures, maybe especially some of the smaller exposures, are there any markets that have changed structurally in your view or operated in such a way that your view of either expansion or even existing in those markets to begin with has changed? I am thinking maybe even specifically of Denver, where the regulatory environment has gotten tougher. So any commentary there would be helpful. Thanks.

Yeah. This is Brad. You know, I would say broadly, not really. You know, I would say you mentioned the one market where we have seen the most change come up from a regulatory perspective. We have seen it in Nevada, but we only have two properties there, which are not core for us long term. But, you know, there has been, you know, certainly some talk in Virginia. I think some of that got pushed off another year or so. The District of Columbia—a lot of things are going on in that market. But with us selling our one property in the District, we should not be exposed to that. So not a lot of change. You know, from an overall portfolio perspective, we still have some markets where we have one asset or two assets, which, from a long-term perspective, are not properties that we want to hold. But I would say those markets also continue to do quite well. You know, another market that, you know, we will have to consider long term that continues to perform very, very well from a demand perspective—it can get some supply, but demand continues to be really, really strong—is Dallas. But it is also one of our largest markets. So, you know, that is a market that we could potentially look at adding to and certainly recycle capital out of longer term. But for the most part, you know, we are not seeing big changes in any market broadly. The Denver component that you talked about—the impact of that is supply in Denver is coming down very, very rapidly. So I think fundamentals will turn around in that market as a result of that.

Our next question will come from the line of Alex Kim with Zelman & Associates. Please go ahead.

Hey, guys. Thanks for taking my question. I wanted to drill a little further into the same-store expense growth guide. The year-to-date is about 90 basis points at the midpoint. I am curious how much of the improvement reflects sustainable operating efficiencies versus timing items. And I was wondering if you could discuss the outlook for some of the cost buckets, specifically insurance as well, with, I believe, the repricing occurring in July at some point.

Yeah. Alex, this is Clay. So yeah, as we are guiding to, you know, for the total expense growth for the year for our same-store portfolio, it is about 1.75%. And what we are seeing there, where we are seeing some good benefits, is really across the board. You know, we talked a little bit about repair and maintenance costs and personnel costs that we saw in the second quarter. I am expecting that to continue out through the back half of the year. The teams have done a really good job of controlling those expenses. We have got it fully staffed, which, in turn, typically leads to lower costs whenever we need to turn a unit. And then you have got the increased retention rates, which are clearly moving in our favor. And so that is helping provide some benefit there as well. You mentioned—and then I will go back to the personnel costs real quick—I mean, we continue to pilot some properties, so we are continuing to see some benefit there. I expect that benefit to continue over the course of the year and potentially even into next year as we look to do more of that. You mentioned insurance costs. We did have a renewal on July 1, and it was a very successful renewal. We had premiums that, in total, declined by over 12%. As you kind of layer through what the impact is for this year, for the back half of the year, and for the full year, we are expecting a little over a 6% decline in insurance costs year over year. That marks our third year of a reduction in premiums and insurance costs. So we are continuing to see really, really good performance from that standpoint. And then the last one I will call out is property taxes. You know, given just the environment that we are operating in, the NOI decline that we have seen and others have seen in our markets is obviously having an impact on real estate valuations. And so we are getting a little bit of benefit there. We continue to focus a lot on that area. It is the largest expense line in our stack there. And so we spend a lot of time focusing on that, making sure that the valuations that are assigned to us are appropriate and pushing back when we need to. So we will continue doing that to manage that aspect of it.

Our next question will come from the line of John Pawlowski with Green Street. Please go ahead.

Hey, good morning. Thanks for the time. My question is on understanding the development economics for your pipeline right now in an environment where there is potentially a pretty big spread between yields when you and others quote kind of gross yield based on face rents and then net yields once you factor in concessions. So let us just take the lease-up pipeline. When these four or five projects actually stabilize in the second half of this year or early next year, what is the true net effective cash yield on this vintage of deliveries, assuming no change in market rents? Just today, at net effective rents, what kind of yields are we looking at?

Got it. Yeah, John. This is Brad. I think I will kick it off. But I will tell you, for our current lease-up pipeline, on average, the projected NOI cash yields on those are in the 6% range. I would say, today, what are those delivering? Probably close to a 5% yield because of the higher concessions that we have. I would say the good news about that is, you know, on our renewals, really across the board at all of our lease-up properties, we are getting about 9% to 10% lease-over-lease increases on those lease-up renewals. So the concessions are burning off, which is what gives us confidence in our ability to hit those yields that we originally underwrote, which were, call it, about 6%. If you look at new underwriting that we are doing today for a new project, you know, we think the yields are somewhere in the 6.25% to 6.5% range. You know, that will include about 4% or so in contingency on construction costs today. We are delivering projects, you know, 2% to 3% below the cost of what our expectations are. That also does include some trending. Generally, what we do is we will trend rents from today—we use today’s market rents—and we will trend those to the stabilization period, which is three to four years, somewhere, call it, in the 2% or so range a year. If you go and look at where we are trending rents versus submarket expectations, we are normally 2%, 3%, or 4% below market expectations in terms of rent growth over that period of time. So that gives you a little bit of a sense of where our revenues need to be or where we are expecting revenues to be versus where the market is expecting revenues to be. And I certainly do not think that it is unrealistic to think that from today’s market-level rent, they would increase, you know, a couple of percent over the next four years.

Our next question will come from the line of John Kim with BMO Capital Markets. Please go ahead.

Thank you. I know you talked about this a bit, but I think there is still some confusion on your assumption that rents will accelerate in August and September because July, you mentioned, is similar to the second quarter. Can you just clarify what momentum you saw in June and July and what gives you confidence that it will accelerate toward the end of the quarter, given that in a normal seasonal year rents typically peak in August?

Hey, John. This is Timothy. Yeah. I mean, what we are seeing is, one, the demand side. We talked about, you know, on the ground, lead volume and visit volume being significantly higher this time this year compared to this time last year. And, you know, some of the strategic decisions we made in late Q2 were really geared toward maximizing pricing as we could in Q3. And I think we are seeing that play out. First is on the renewal side, as we talked about, where, again, retention is higher. And the actual renewal rates that we are getting are significantly higher than what we got in Q3 of last year. And then we, you know, spent a lot of time just looking at what our leasing is and what leases are on the books that we have for Q3 so far. Obviously, there is still a lot of time to go with new move-ins over the next couple of months. But when we compare where we are this time to the same time last year, you know, the rates we are getting in August and September, new lease rates, are significantly better than, again, the same time last year. So you combine that with moderating supply, you know, the absorption that we saw in the first half of the year, but frankly, with a little bit easier comps at this time last year. So all those factors play into what we are seeing and the momentum that we are seeing, and that we expect to play out over the back half of the year.

We have no further questions. I will turn the call back to MAA for closing comments.

Well, no other comments from us. Certainly, if you guys have any follow-up questions, feel free to reach out. Thanks for joining us today.

This concludes today’s program. Thank you for joining. You may disconnect at any time.